For the past few months we’ve been gathering data on Britain’s biggest pension providers. We’ve looked at troublesome transfer forms…
Eughh, why's it so tricky to transfer existing pension funds into a new scheme? Baffling forms: a way to keep financial advisors in work?!— Parminder Lally (@pklally1) August 21, 2016
Extortionate exit fees…
@MarkAthertonTim good news on exit fees. I was quoted £15,000 to transfer old pension of £60k to a new provider so I could drawdown— Jocelyn Taylor (@JETCONS) May 28, 2016
And overall transfer times…
So, what exactly does the data tell us?
Not so Now: Pensions…
On average, customers face a 17 day wait to transfer their pension. In the best case scenario a customer at St James’s Place could expect to see their pension transferred within six days, whilst in the worst case scenario a Now: Pensions customer could face an average wait of 59 days.
Close to half of the providers examined take three weeks or more to transfer a pension.
Staggeringly, close to half of the providers examined (8) take three weeks or more to transfer a pension, with Aviva and Towers Watson following Now: Pensions closely with an average wait of 44 days apiece. Prudential (39) and AON Hewitt (33) make up the top five slowest performers.
Perhaps bankers aren’t so bad after all
The data further cements the perception of an outdated pensions industry, particularly in comparison with banking where current account transfers take seven days or less. Australia already imposes a three-day pension transfer deadline, illustrating that quick transfers are eminently possible, especially in the age of the internet.
Elsewhere, it also appears that some customers are facing extortionate exit fees. The highest exit fee discovered was a shocking 35% of the total pension.
Customers clearly aren’t happy
In addition to the data analysis we’ve been speaking to affected customers, with their testimony revealing puzzling forms, unreturned calls and even requests for original birth certificates. Some pension owners have even gone so far as to call these ‘delay tactics’, and it’s an assertion echoed by Romi, our CEO:
“Many providers treat customers’ pension money like it’s their own, which is hugely problematic, as the pension system lacks trust and we need to restore confidence to get people saving. This is why we’re calling for a 10-day pension switch guarantee, as well as for the total removal of exit fees.
“The biggest providers should be setting an example, but they’re often the worst offenders. They’re sluggish, unhelpful and act like the self-appointed pension police, on some occasions bombarding customers with scam warnings to put them off - even if they’re transferring to another FCA regulated business! There are certainly questions over whether these providers are meeting the Treating Customer Fairly rules of the regulator, and we will be writing to the government about specific practices we have observed that appear anti-competitive and expose customers to undue detriment.”
As Vice Chair of a health authority helping to manage a budget of £820 million, I feel fairly qualified to manage my pension arrangements.
Melanie, who’s recently experienced the pension transfer process, added:
“One of my providers asked me to provide details of how I became aware of the scheme, details of all the promotional material I received, what other investments I planned to transfer, what advice I had taken (and the details of my adviser) and any other investments my adviser recommended. It seems a very paternalistic and almost patronising response to a transfer request. As Vice Chair of a health authority helping to manage a budget of £820 million, I feel fairly qualified to manage my pension arrangements. At the end of the day it’s my money, not theirs.”